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Banks struggle to keep up with mobile demand

Want to check your balance, transfer money between accounts, or locate the nearest bank branch? There’s an app for that.

But when it comes to making more complex banking transactions over smartphones — from depositing checks to transferring money to a friend’s account — many banks are not offering mobile technology as fast as their customers are ready to adopt it. Demands for new options are growing so quickly that by the time a bank upgrades its software, customers are already asking for the next new function.

Customers, in fact, are embracing mobile banking faster than they did ATMs after they were introduced in the 1980s, according to bank officials.


Sovereign Bank, for example, recently offered its first mobile banking app, which it designed based on surveys that showed few customers wanted to make mobile deposits. Not long after the app was released in May, customers raved about the ability to check balances and accurately find ATMs, but said they wanted more — particularly the ability to deposit checks via smartphone.

Laurie Spitz, 46, who owns Smileboston Cosmetic & Implant Dentistry with her husband, is a frequent user of the Citizens Bank app for both her personal and business accounts. It’s great for checking balances and transferring money, Spitz said, but she has routinely asked her branch representatives when the company will introduce a smartphone check deposit function.

“The banking app has been really good until you realize what other apps have,” said Spitz, who lives in Needham.

Nearly half of all smartphone owners have used mobile banking in the past year, according to a study the Federal Reserve released in March. That’s up from 42 percent from the previous year in what the central bank calls the “rapidly evolving use of mobile financial services.”

Almost every financial institution seems to have a mobile banking app, but many banks haven’t made the leap to the more advanced capabilities, said Mary Monahan, the executive vice president and research director for Javelin Strategy & Research, a California company that rates banks on their mobile apps. Many customers still can’t open accounts via smartphone, make payments, or deposit checks by snapping photos of them.


Monahan compared current mobile application technology to when banks started using the Internet to promote their services, doing little more than posting a photocopy of a brochure online.

“We have to bring out added functionality,” Monahan said. “It’s getting better. But there’s a long way to go.”

As a sign of improvement, she points out that 16 of the top 25 banks in the United States allow customers to deposit checks remotely this year, up from six in 2011. Customers of Bank of America, Chase, and Rockland Trust, the second-largest community bank in the Boston area, have been able to snap photos of their checks and send the images to the bank for deposit for more than a year now. Bank of America said that more than 100,000 checks are deposited through its mobile app every day.

Some banks are going even further. USAA Federal Savings Bank, a San Antonio-based online bank, added voice command technology to its mobile options in June, allowing customers to check balances and make transfers by speaking to the app. US Bank, based in Minneapolis, is also experimenting with voice recognition technology while trying another innovation that might get more banks to offer mobile deposits: charging 50 cents to deposit checks via smartphone.


Banks recognize that mobile banking apps are crucial to their future, because they save money by requiring fewer employees to handle transactions. Processing a check through a teller costs a bank on average $4.25, compared to 10 cents via a mobile app, according to Javelin.

Mobile apps also build customer loyalty and allow banks to sell customers on other products and services, such as loans, said Ed O’Brien, the director of banking channels at Mercator Advisory Group, a Maynard consulting and research firm.

“The point is to be so joined at the hip with the customer, they wouldn’t think of leaving the bank,” O’Brien said.

Considering what customers can already do with apps on their phones — organize their schedule, make a dentist appointment, buy coffee, and download their favorite music — traditional banking functions still lag.

Banks have been slower to establish a robust presence in mobile world because of older computer systems throughout the industry and concerns about security, analysts and banking officials said.

“Having your bank account hacked is a lot more impactful than having your Facebook account hacked,” said Alex Jimenez, Rockland Trust’s director of digital channel management. “It isn’t like other industry, Money is so important that people aren’t willing to do anything with it.”

Additionally, the technology that supports traditional banking activities wasn’t designed for real-time transactions, Jimenez said. For example, banks collect checks during the day, then transmit them in batches to other banks for payment at the close of business, a process that takes time.


But banks, having addressed security concerns, are now investing in mobile technologies more aggressively, said Bruce Spitzer, a spokesman of the Massachusetts Bankers Association.

For example, both Sovereign and Citizens Bank officials said that they are considering check deposit technology, along with other features, when they upgrade their apps, although the timing of those releases was uncertain.

There is a danger for banks that don’t keep up. While consumers are still generally satisfied with their banking apps, that percentage has dropped, according the Federal Reserve. In December 2011, 62 percent of mobile banking users were very satisfied with their experiences; a year later, that number dropped to 52 percent.

“Our financial institutions were slow to move into this technology,” Spitzer said, but now it’s viewed as a necessity.

“They need to keep up with customers,” Spitzer said. “And the customers are driving this.”

Deirdre Fernandes can be reached deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.

Because of an editing error, this story originally incorrectly stated Rockland Trust’s size. It is the second-largest community bank in the area and the largest based south of Boston.